The new wave of Romanian IT start-ups

The new wave of Romanian IT start-ups
By Clare Nuttall in Bucharest March 15, 2017

A handful of Romanian serial entrepreneurs who have achieved success in the software field are now launching innovative hardware products that span areas from education to agriculture to medicine.

Woogie creator Bogdan Coman says the inspiration for the “alien buddy” came from his daughter Daria, who used to imagine herself as an alien sent to earth to make life more fun for humans. The voice-activated device, slightly reminiscent of an alien penguin with a single antenna protruding from its head, chats to children and answers their questions as well as helping them learn.

Woogie, which is currently at the beta-testing stage, is based on artificial intelligence (AI), natural language processing and machine learning technologies that allow it to converse with its child owner. It can remember the child’s age, gender and preferences and deliver content based on previous interactions.

 

 

“The goal is to inspire kids to explore more, nurture curiosity and grow their interest in the world around them,” Coman tells bne IntelliNews. “Woogie is not just an edtech smart device; its main purpose is to deliver a unique user experience to every child he encounters. He is a character with his own story and personality, as he doesn’t just answer questions but he even has opinions on different topics.” Woogie’s creators were delighted when one child described an early version as “Siri with personality”.

Coman calls himself as a “lifetime entrepreneur”, who has been running several businesses since he was at college. His colleague product director Oana Korda is also the founder of a social business, while CTO Andrei Voinescu has a PhD in wireless sensor networks.

Coman and Korda have something in common with the founders of several other innovative hardware startups; they are the latest ventures of serial entrepreneurs who initially made their mark in other areas of the IT industry, mainly software development.

Romania has developed a strong IT sector, with numerous international companies targeting the country for offshore activities, and local firms offering similar services. Because of its low costs and skilled workforce, Romania was at first attractive as a location mainly for call centres. Later, however, multinationals started moving higher value-added activities to the country, such as Deutsche Bank’s global technology centre in Bucharest.

The strong local IT sector has also created a spawning ground for startups. Initially most of these were in software, which has already produced some stars like antivirus company Bitdefender. But, according to Tudor Stanciu of TechHub Bucharest, now a growing number of hardware startups have been launched, with most still at an early stage.

“We see a lot of potential in the area of hardware,” he tells bne IntelliNews. “Once software is quite established, you can bring the additional complexity of hardware products that can appeal even more to customers by providing something touchable.” He considers this has even bigger market potential.

“We are seeing companies being built by people who have previously worked as a team on small outsourcing companies, or built several teams providing IT services or consultancy,” he says. “They now have a revenue stream, and have shifted to building a core product. This may be based on personal experience, rather than being related to what they were doing in the past.”

Common problem

This was the case for entrepreneur and former jiu jitsu champion Camil Moldoveanu, who was inspired to launch Reflex to track and analyse physiotherapy exercises after a knee injury. Moldoveanu admits that he abandoned his own physiotherapy regime after a few weeks - a decision that later led to him needing surgery. He later discovered this is a common problem, and cites research by a US insurance company that found 70% of people who do physiotherapy never finish their programmes; 50% of these get injured again within the next two to three years, and of these around half need surgery.

“Because of my experience, I saw a problem. I started to think about why I couldn’t finish my physio. I usually think like this; I like to find problems and think about solutions to them,” he says. He believes part of the problem was the lack of a concrete measure of his progress. In addition, while many patients prefer to complete their physiotherapy at home, they usually lack motivation when they aren’t monitored.

Moldoveanu and his colleagues used state of the art motion detection technology to develop bands that are placed around the injured joint, with sensors that connect to each other to record each movement as it happens. An algorithm developed by the team shows whether movements are done correctly, and this information is relayed to the physiotherapist. If the patient is doing the movement wrongly, a shadow appears on their screen to show how their movement differs from the correct movement.

 

 

While there are other wearables using sensors on the market, this is the only product where the sensors connect to each other, providing a visualisation of the movement. The only other place this technology is used is in motion visualisation for Hollywood movies, according to Moldoveanu.

The technology isn’t intended to replace physiotherapists - the device is only available through clinics - but Moldoveanu says it is particularly useful for people working remotely on their recovery. “We know tele-rehabilitation will increase and in Europe a lot of money is being invested to decrease the costs of providing medical services to people staying at home so they don’t have to come into a big hub like a hospital,” he explains. “The European Commission is very committed to this.”

The company also reports a lot of interest from insurance companies who want to check their customers finish their physiotherapy, and might pay for the devices in future.

Another serial entrepreneur that has struck out into a new direction with his hardware product is Cezar Nourescu, creator of silo monitoring technology Silometer. Nourescu says he has “been in the IT industry since eighth grade”, helping out at his father’s small IT business near Bucharest. His early career spanned all aspects of the IT sector, before he and his brother founded their own company creating custom software for medium-sized companies. Their foray into developing their own online school management system became their “first big failure” according to Nourescu, as they were unable to make headway against the big players that inevitably won government contracts in Romania.

Undaunted, they went on to launch a land management app for farmers, one of whom mentioned that he wished they would develop an app for temperature monitoring in grain silos - and Silometer was born.

Typically multiple sensors are hung from the roofs of silos to measure the temperature at different depths. Readings need to be recorded and compared over time to check for significant increases in temperature that can be a sign of fermentation, but doing this on a large farm can be half a day’s work for one person.

The firm’s technology connects to sensors to collate readings and produce a 3D view of temperatures at different points in each silo. It also measures the temperature outside the silo, and can be used to turn ventilators on and off remotely. More functions are still being added.

 

 

Dirty hands

Silometer moved quickly; their first prototype was ready in April 2016 and they are already working with their first customers while they work to perfect the product. They were voted startup of the year by the Employers Association of the Software and Services Industry (ANIS) in 2016.

While their background is in software, Nourescu says his team was excited about moving into hardware as well. “The team don’t only work to have a job. They are extremely smart and want to learn something new every day. Doing something new is the heartbeat of the project,” he says, adding that “getting our hands dirty is a cool thing”.

This was literally the case for Silometer as they went out into the farms to fit their systems, but other developers have similar feelings about the switch to hardware. Some have benefitted from team members with experience in the area. For example, Moldoveanu says his co-founder Andrei Kluger “is a genius in building stuff, especially hardware”, having previously designed bomb detection robots to secure Romania’s borders.

Indeed, the availability of great talent in Romania is one of the factors cited by all three founders. “You get access to a lot of quality people that are optimists and are excited to work with you. They really care about what you are building and would love to join your team even though you cannot pay as much as a big company,” says Moldoveanu.

“There are a lot of very good tech guys here and if you have an appealing project and a good offer you can find the right team,” agrees Nourescu, adding that the trick is to know how to attract them. He describes his workspace as “Google-ish” with Wiis and Playstations, flexible hours, free food and his beagle curled up in its basket in the corner.

Woogie’s Coman cites the evolution of the tech ecosystem in Romania, noting that cities such as Cluj have now become hubs for tech startups. His first experience of the scene was with the MVP Academy, a local business accelerator. “This sector is starting to see more and more founders, incubators and, who knows, maybe even angel investors.”

So far, however, entrepreneurs say it can be harder to find investors than in better established high-tech hubs - though on the plus side, small amounts of money go further in Romania. In addition, launching a new hardware product when they already have a business with a revenue stream also puts the entrepreneurs in a position where they don’t initially have to seek funding or give up large chunks of equity at an early stage. 

Reflex is the only one of the three to have received funding, taking a small investment from an Austrian business angel. Moldoveanu says company is interested in meeting investors as it is likely to need funding in around six months. 

So far neither Silometer nor Woogie have received funding yet, although Woogie is considering a crowdfunding round in the near future. Silometer is using revenues and pre-sales to fund its operations and has avoided taking seed funding, but Nourescu says they would be willing to talk to larger investors as they scale up and look to find customers outside Romania.

Another constraint is the relatively small size and low income of the local market. While the team behind Woogie is Romania, it is targeting English-speaking markets starting with the UK. Another Romanian team, led by serial entrepreneurs Mihnea de Vriea and Falvius Balaj, developed Scooterson, described as the “world’s first intelligent scooter” but the company is based in London.

Vector Watch is another successful hardware startup whose main operations are in Romania, although it is headquartered in London. The software platform and development team were acquired by US fitness wearables company Fitbit in January.

Moldoveanu and Nourescu are also looking across their country’s borders. “If you only operate in the Romanian market, you can have a nice family business without appeal to venture capitalists,” says Nourescu, who is eyeing opportunities in neighbouring Bulgaria and Ukraine. Meanwhile, Reflex is working with several clinics in Bucharest, but is also looking for clinics elsewhere in Europe to arrange development partnerships.

 

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